This document is a lesson from BinaryTradingFinance.com on single candlestick patterns, which provide information about price movement and whether a move is continuing or reversing. It defines and provides examples of continuation/reversal patterns like the Doji (indecision), Pin bar (exhaustion), Hammer/Hanging Man (rejection), and Inverted Hammer/Shooting Star (rejection). Real stock examples are given to illustrate each pattern at key support/resistance levels and how they can be used to time trades that follow or reverse the trend.

1. Binary Trading Finance
100 - Beginner Course
Lesson BTF107: Single Candlestick Patterns
Presented by Orlando Gutierrez for BinaryTradingFinance.com

2. Risk Disclosure
Trading binary options is a challenging and potentially profitable endeavor for
educated and disciplined investors who are willing to take an above average risk
on their capital. Before you decide to enter the world of binary options you
should carefully consider your objectives, education/capability and most of all
your risk aversion. Never invest money you cannot afford to lose.
Moreover, the information presented here is for informational and educational
purposes only; the contents of this presentation are not to be considered as an
offer or advice to buy or sell any particular security.

3. Summary
• What are single candlestick patterns
• Continuation or Reversal patterns?
• The Doji
• The Pin bar
• The Hammer & The Hanging Man
• The Inverted Hammer and The Shooting Star

4. What are single candlestick patterns?
• Single candlestick patterns refer to formations composed of only one
candlestick.
• These candlesticks are not just any candlestick, they give us information
about price movement and an idea if a move is continuing or reversing.
• The most important thing about these patterns are the candle´s wicks
and bodies.
• By analyzing the shape of the candle we can accurately guess if a level
has been rejected and we might reverse or if there´s short term
indecision and the move might continue.

5. The Doji
• A Doji is a candle that has a very shallow body, almost non
existent, with long wicks to both the upside and the down side.
High High
LowLow
Open OpenClose

6. What does the Doji tells us?
• The opening and closing price of the candle are almost the same but the wicks
of the candle are long.
• This tells us there has been a great deal of indecision between buyers and
sellers, which means that neither the buying or the selling pressure could take
each other out to make prices move in a definitive direction
• This information is important and must be utilize with other technical tools to
confirm a continuation or a reversal.
• If a Doji appears at a level of strong support this might tell us that that the bears
could not overcome the buying pressure at the level and price might reverse, so
we will be looking to buy calls on a trend reversal.
• If a Doji appears in the middle of a move with no apparent level of support or
resistance, this might be viewed as a continuation pattern.

7. Real example of a Doji
• Here´s a daily chart of AAPL. Price started to move down but then
retraced to a key levels just to see a doji formed and a clear continuation
of the main trend
Buy puts
ALERT!

8. The Pin Bar
• A Pin bar is a candle that has a shallow body, with long wicks to
either the upside or the down side.
High (Tail) High (Nose)
Low (Nose) Low (Tail)
Open
Open
Close
Close

9. What does the Pin bar tells us?
• The opening and closing price are very close to each other forming a
small body on the candle.
• However the long wicks on the downside (bullish pin bar) and the upside
(bearish pin bar) gives us signs of exhaustion.
• We find the bearish pin bar at the end of a down move and the bullish
pin bar at the end of an up move.
• Given the information that we get from these formations we can
accurately say they are a reversal patterns.
• When a Pin bar appears at the end of an uptrend at a resistance level we
could use them as a confirmation of reversal and buy calls to counter
trend trade.

10. Real example of Pin bar
• Here´s a daily chart of AAPL where we can clearly see a pin bar buy
in play at the end of a down move
Buy calls
ALERT!

11. The Hammer and Hanging Man
• The hammer and hanging man are the same in appearance but
they actually occur in very different scenarios.
Open
Close
Low (Tail)
This candlestick is very
similar to the bullish
pinbar, the difference is
that the wicks point to
the side of the trend
signaling rejection.

12. What does the Hammer and Hanging
man tells us?
• The opening and closing price are very close to each other forming a
small body on the candle.
• However the long wicks on the downside gives us signs of rejection.
• Price moves following the trend but then retracts forming a big wick and
signaling rejection of the zone and a possible reversal.
• When a hammer appears at the end of down move or at a support level
we could use it as a confirmation of reversal and counter trend trade.
• When a hanging man appears at the end of an up move or at a
resistance level we could use it as cofirmation of reversal and buy puts
to trade the reversal.

13. Real example of a Hammer
• This is a daily chart of FB. The main trend is up and we are looking to buy calls on a
correction. We wait for price to retrace and we get a hammer at $47.00 which is also
a round number and psychological support.
Buy calls
ALERT!

14. The Inverted Hammer and The
Shooting Star
• The inverted hammer and shooting star are the same in
appearance but they actually occur in very different scenarios.
Open
Close
High (Tail)
This candlestick is very
similar to the bearish
pinbar, the difference is
that the wicks point to
the side of the trend
signaling rejection.

15. What does the Inverted Hammer and
Shooting Star tells us?
• The opening and closing price are very close to each other forming a
small body on the candle.
• However the long wicks on the upside gives us signs of rejection.
• Price moves following the trend but then retracts forming a big wick and
signaling rejection of the zone and a possible reversal.
• When an inverted hammer appears at the end of a down move or at a
support level we could use it as a confirmation of reversal and counter
trend trade.
• When a shooting star prints a the end of an up trend we can use it as
confirmation of reversal and trade it to the down side buying puts.

16. Real example of a Shooting Star
• Here´s a daily chart of COST. We can clearly see that after a big move
up we we are due for a reversal and a shooting star prints giving us the
green flag to buy puts.
Buy puts
ALERT!

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